Small Business Week Wrap-up: A Reminder to Keep Our Entrepreneurs Top of Mind All Year Long

John Arensmeyer

John Arensmeyer

Originally featured in The Huffington Post:

As 2012 progresses, the political heat in Washington is climbing faster than summertime temperatures, and small business is becoming increasingly central to policy debates in Congress. Entrepreneurs make up a core constituency in the United States. With National Small Business Week having recently ended, now is a better time than ever for legislators to reflect on these individuals’ needs and work to address them — one of which is tax relief. Luckily, Congress will have a chance to do just that when the Small Business Jobs and Tax Relief Act of 2012 comes up for a vote in June.

Before we get into the policy nitty-gritty, let’s talk about small business’s impact on our economy. In early May, Automatic Data Processing, Inc. (ADP) released data revealing our nation’s smallest businesses — those with 1-49 employees — continue to outperform large businesses in the job creation arena. They generated roughly half of all new jobs in April, while large businesses created just over 3 percent.

Figures like these reinforce the fact that small businesses are indeed the backbone of our economy. If we want to sustain that, or better yet improve it, it’s time for lawmakers to put partisanship aside and work together on policies that meet entrepreneurs’ needs. And in fact, legislation recently introduced in the Senate would be particularly conducive to small business job creation. Authored by Senate Majority Leader Harry Reid, the Jobs and Tax Relief Act would help small firms save money in two ways.

For one, it would give them a 10 percent income tax credit on increased payroll in 2012. This is meant to encourage small business owners to hire or boost employee wages right now, and to reward them for doing so. The nonpartisan Congressional Budget Office has said that compared to other proposals for incentivizing small business job creation, proposals like this one would have the greatest value per dollar of output.

Another way the bill would boost small firms’ bottom lines is by extending the 100 percent deduction for equipment purchases. That would lower entrepreneurs’ after-tax costs, prompting them to make new investments that can accelerate our overall economic recovery. This deduction is widely known to enjoy bipartisan support, which makes sense, considering it reduces the average cost of capital across all investments by more than 75 percent for small business owners, according to estimates from the Treasury’s Office of Tax Policy.

As we move beyond the recession, it becomes increasingly apparent that our smallest companies are the ones putting America back to work. That’s why we’ve been celebrating them this week. From our online seminars that inform entrepreneurs about how to navigate loan resources, healthcare reform and energy upgrades to our national small business photo contest, it’s been a busy week for us.

We’re doing everything we can—every week—to help make sure entrepreneurs have what they need to grow the economy. We hope legislators will make it a priority to do the same. By passing the Small Business Jobs and Tax Relief Act, lawmakers can give entrepreneurs some well-deserved relief. It would not only better financial conditions for them, but for the economy overall–and that means for each and every one of us.

New TV Ad, Opinion Poll Highlight Colorado Small Businesses’ Support for Balanced Energy Policy That Ensures Protection of Public Lands

Colorado small business owners strongly believe the preservation of the state’s natural assets is essential to their financial success and that of local economies, and they support the president’s ‘all-of-the-above’ strategy to develop new energy resources, particularly if it includes provisions to protect public lands, according to opinion polling we released this week and reflected in an ad airing in the Denver metro area.

Check out the ad here:

The poll, conducted by Greenberg Quinlan Rosner Research, found nearly two-thirds (63%) of Colorado small business owners agree, with 43% strongly agreeing, that access to parks, public lands and other outdoor opportunities is a large part of the reason they live and do business in Colorado. Exactly half agree Colorado’s national parks, forests, monuments and wildlife habitats are not only an essential part of the outdoor culture and quality of life, but also one of the reasons they do business there.

In addition, 72% support the president and Congress’s “all-of-the-above” energy strategy, which promotes development of various energy sources including solar, wind, natural gas, oil, coal and more. But they find this policy even more attractive if it takes steps to ensure some areas remain accessible to visitors and free of development: 55% would be more likely to support an all-of-the-above strategy that takes that extra step. This is more than double the percentage of owners who would be less likely (26%). Today, Small Business Majority released a TV commercial in the Denver area demonstrating support from real small business owners who are looking for an all-of-the-above energy approach that protects public lands.

“Very recently, I moved my company to Colorado because I knew it was the ideal place to find the right customer demographic—and the most well-suited employees—to make my business thrive,” said John Land Le Coq, owner of Fishpond Inc. and Lilypond Inc. in Denver. “As a company that offers outdoor products, it’s important to us that we use our business to spread the word on issues that revolve around the outdoors. We didn’t start the company this way, but it became who we are because of the big impact that protecting the outdoors has on the success of our business. ”

A recent proposal in Congress that garnered small business support in the poll would establish Browns Canyon and the Arkansas River Valley as a national monument. Two-thirds support this proposal, which would allow continued vehicle access and public use of Browns Canyon such as hunting, fishing and rafting, but prohibit new oil and gas drilling, and other development.

In addition, small business owners agree by a 4:1 ratio that protecting public lands by designating new national monuments and national parks would positively (rather than negatively) impact local jobs and the economy. Another 53% feel such efforts would positively impact small business opportunities tied to public lands, and 51% say it would help Colorado attract and retain entrepreneurs and new businesses.

Our nation’s most prolific job creators are asking that smart steps are taken to preserve Colorado’s natural assets because they believe it’s good for business. It’s evident public lands play an important role in entrepreneurs’ decisions to open businesses in Colorado. And they’ve seen firsthand that protecting those areas can attract business, which is why they’d like to see national monuments established to preserve them, and it’s why they are asking lawmakers to balance public lands protection as they develop new energy policies.

This was not just a poll of owners whose income is related to outdoor activities. In fact, 87% report their revenue is not tied to open space in any way, such as selling outdoor equipment, offering bike tours or even just owning a business near a touristy outdoor area. When asked how their businesses are faring, 41% of Colorado small business owners say they’re doing well, while only 12% say they’re not doing well.

Additional findings from the poll include:

  • 83% agree we can protect land and water, create jobs and maintain a vibrant economy simultaneously.
  • 93% believe national parks, forests, monuments and wildlife areas are important to Colorado’s economy.
  • 92% believe public spaces drawing tourists can boost business for local restaurants, hotels, grocery stores and more.
  • 66% believe we should not allow more private companies to develop public lands when doing so would limit the public’s enjoyment of them.
  • 53% identified as Republican or independent-leaning Republican, 28 percent identified as Democrat or independent-leaning Democrat and 18 percent identified as Independent.

For more information on the poll, visit http://www.smallbusinessmajority.org/small-business-research/public-lands

Tax Credit Report: 7 in 10 Small Businesses Eligible for Combined $15.4 Billion in Healthcare Tax Credits

John Arensmeyer

John Arensmeyer

Originally featured in The Huffington Post:

Since the enactment of federal health care reform, hundreds of thousands of small business owners across the country have been able to claim a tax credit for offering their employees health benefits — and millions more are eligible, according to a report released today by advocacy group Small Business Majority and consumer group Families USA. For tax year 2011, seven in 10 small businesses with 25 or fewer employees are eligible for the credit.

But most striking is that the majority of entrepreneurs don’t even know this credit exists.

American small businesses employ millions of workers and create 65 percent of all net new jobs. They can be found in every pocket of the country, driving growth in metropolitan cities, suburban settings and rural towns. Small businesses hold an iconic position in the American consciousness — a position that sometimes makes it easy to forget how much they struggle to achieve that deserved recognition.

The reality is, most small businesses operate within thin profit margins. And that means they’re less likely than big businesses to be able to afford health coverage for their workers. It’s a decades-old problem that the Affordable Care Act was designed specifically to address. According to the report released today, more than 3.2 million small businesses employing 19.3 million Americans are eligible for the healthcare tax credit included in the law to help offset their premiums. Erica Hawthorne, the marketing manager for Ken Weinstein’s Philadelphia, Penn. Trolley Car Diner, is one of those 19.3 million.

Erica reports that Ken received a tax credit of 19 percent of his premiums, and that she has directly benefited. After being on an individual plan, Erica was able to gain better insurance when Ken decided to expand employee coverage after receiving the credit. “Offering employee health benefits has helped the business attract and retain staff,” Erica said. “When I was able to switch over to the group plan, I saw a significant change in my premiums. It really increased my take-home pay. From an employee perspective, offering health insurance adds to the entire package of any job. It’s mutually beneficial for a business and its employees.”

Entrepreneurs like Ken are using their tax credit savings to boost benefits, hire new workers and more. With $15.4 billion available for this year’s credits alone, eligible small business owners and their employees stand to reap big savings. That $15.4 billion amounts to an average of $800 per employee, or $1,066 at businesses that qualify for the maximum credit of 35 percent of their 2011 premium costs.

According to the report, two in five eligible businesses should qualify for the 35 percent maximum (which in 2014 will jump to 50 percent). Those who think they might be eligible should talk to their accountants, but to meet basic qualifications, owners must have fewer than 25 full-time employees and pay at least 50 percent of their premiums.

Unfortunately, not nearly as many employers who are eligible for this benefit have taken advantage of it. This is largely due to small business owners’ overall unfamiliarity with this provision of the Affordable Care Act. Our national opinion polling found 57 percent of small business owners have never heard of the tax credit. For the sake of these small businesses, it’s imperative lawmakers and small business groups spread the word about this and other provisions in the law that will help boost entrepreneurs’ bottom lines. These individuals — the cornerstone of state and local economies — are doing everything they can to build up their companies right when our nation needs it most.

Follow John Arensmeyer on Twitter: www.twitter.com/SmlBizMajority

New Report: Tax Credits Could Help up to 3.2 Million Small Businesses Provide Health Coverage for Their 19 Million Workers

John Arensmeyer

John Arensmeyer

Original statement issued May 9, 2012:

More than 19 million U.S. workers are employed by the 3.2 million small businesses eligible for $15 billion in tax credits in the federal healthcare reform, according to a new report released today. The tax credit helps small businesses pay for health coverage for their employees. A major obstacle to coverage, the report notes, is that many small business owners are unaware of these tax credits because of the noisy—and often misleading—debate over healthcare reform.

The tax credit program is outlined in a report released today by Small Business Majority and the consumer group Families USA. The report contains detailed information on the number of eligible employers and employees in each state whom the program could benefit. It also includes the total dollar amount of tax credits that could be provided to businesses in each state.

In general, businesses that offer health coverage and employ fewer than 25 full-time middle-class workers are now eligible to receive a tax credit of up to 35 percent of the cost of premiums for their workers. In 2014, the size of the credit will increase to cover up to half of the cost of health insurance provided to workers.

The tax credit was included in the Affordable Care Act to help the smallest businesses offer coverage—those who traditionally have the most difficult time doing so. In 2011, only 71 percent of small businesses with 10 to 24 workers offered coverage to their workers; among small businesses with fewer than 10 workers, only 48 percent offered coverage. By contrast, 99 percent of businesses with 200 or more workers offered coverage.

The following are among the key findings of the report, titled “Good Business Sense,” about small business employers. (The report itself also contains state-specific data.)

  • More than 3.2 million small businesses (70.1 percent of businesses with fewer than 25 workers) are eligible for tax credits to help with the cost of health insurance coverage for their workers for the 2011 tax year.
  • More than 1.3 million small businesses are eligible to receive the maximum tax credit when they file their 2011 taxes.
  • More than two in five (40.3 percent of) small businesses eligible for a tax credit are eligible to receive the maximum tax credit when they file their 2011 taxes.

The following are key report findings about U.S. workers. (The report itself also contains state specific data.)

  • Nearly 19.3 million Americans are employed by a small business that is eligible for a tax credit for 2011.
  • Of these workers, nearly 5.8 million are employed by a small business that is eligible for the maximum credit.
  • The total value of tax credits available to eligible small businesses for 2011 is more than $15.4 billion, an average of $800 per worker.
  • The total value of tax credits available to small businesses eligible for the maximum credit is more than $6.1 billion, an average of $1,066 per worker.

The report also contains state-specific data by race and ethnicity on the number of workers who can benefit from the tax credits. As the report makes clear, however, workers and employers can only begin to benefit when they become aware of the tax credit program.

Among small businesses with low-wage workers, the likelihood of offering coverage is even lower. As a result, lower-wage workers employed by small businesses are much more likely to be uninsured than other working Americans.

We know from our opinion polling that small businesses want to offer their employees coverage but many of them can’t afford it. The tax credits will make it easier for small businesses to offer coverage, which makes their businesses more competitive and boosts their ability to create jobs and drive economic growth.

“Small businesses seeking to provide health coverage for their employees have traditionally faced health insurance premiums that are significantly higher than those for large businesses,” said Ron Pollack, executive director of Families USA. These high premiums are due to higher administrative costs and premiums per employee in the small group insurance market, he said.

“The tax credit program, a provision of the Affordable Care Act, now makes it possible for small business to compete with large employers,” Pollack said. “This is great news for these small companies, who can now offer health benefits when competing for talent in the job market. Just as importantly, it’s great for workers and their families who will now have access to affordable health care.”

“We also know from our polling that the majority of small businesses don’t know these credits exist to help them,” Arensmeyer said. “The best way to serve small business owners is to educate them about this provision so they can participate in and benefit from it.”

Families USA and Small Business Majority contracted with The Lewin Group to develop the estimates used in the report. The full report, “Good Business Sense: The Small Business Health Care Tax Credit in the Affordable Care Act,” is available at http://www.smallbusinessmajority.org/small-business-research/downloads/050912_Small_Business_Healthcare_Tax_Credit.pdf.

Small Businesses Create 15 Jobs in April to Every One Created by Big Business

John Arensmeyer

John Arensmeyer

Original statement issued on May 4, 2012:

ADP released data Wednesday revealing our nation’s smallest businesses—those with 1-49 employees—continue to outperform large businesses in the job creation arena. Businesses with fewer than 50 employees created roughly half of all new jobs in April, while small businesses overall accounted for a sweeping 96.7 percent of all new jobs last month. Conversely, large businesses created a mere 3.3 percent of new jobs.

These figures reinforce the notion that small businesses—and particularly those with fewer than 50 employees—are indeed the country’s primary job creators and remain the backbone of the American economy. Of the 119,000 new jobs created last month, the smallest businesses created 58,000, while those with 50-499 employees were responsible for another 57,000, according to ADP (Automatic Data Processing, Inc.). Only 4,000 jobs were generated by businesses with more than 500 employees in April.

We encourage lawmakers to continue focusing on policies conducive to small business job creation, such as investments in renewable energy, which 71 percent of small business owners believe would help create jobs immediately according to research we released last week. Boosting small firms’ access to credit is another surefire way to keep the momentum going. Small businesses can and will put our economy back on track, but they can’t do it singlehandedly. Legislators must continue pursuing pragmatic economic policies that can ensure entrepreneurs have they tools they need to keep rebuilding the economy.